MNI BRIEF: UK Banks Well Capitalized BOE Stress Tests Show

The Bank of England's stress tests, based on a scenario with a deep recession and rise in inflation, showed that UK banks were resilient and all of those tested had adequate capital, the Financial Policy Committee minutes said Tuesday, and capital requirements were lowered as a result.

The Tier 1 capital requirement, previously set at around 14% of risk weighted assets, was lowered to 13%, with the FPC saying that the UK banking system has maintained robust liquidity and funding positions and that asset quality remained strong. The countercyclical capital buffer, designed to protect against future shocks, was maintained at two percent.

"As part of ensuring the UK banking sector is both resilient and able to support growth, the FPC has reviewed its assessment of the appropriate level of capital requirements for the UK banking system," the FPC said.